Between Sept. 3 and 5, the Sydney-based investment firm bought almost 14.7 million shares for A$8.7 million, or about 59.5 Australian cents apiece, to more than double its holding to 12 percent. The stock had slumped 26 percent on the ASX the week before after the New Zealand media group posted lacklustre first-half earnings. The dual-listed stock last traded at 67 cents on the NZX.

Renaissance portfolio manager Naveen Patney said the stock was materially undervalued compared to other media companies. It was trading at a low price-to-earnings multiple despite its strong cash generation and solid balance sheet.

"The share price also reflects no upside from any of its digital classified launches which offers significant long-term growth potential," Patney said in an email. "OneRoof is particularly gaining solid audience traction and has the ability to be a very credible competitor in online real estate classifieds."

NZME reported a 53 percent decline profit as it accelerated investment in digital classified ventures while contending with a tepid radio advertising market and the long-term decline of hard-copy print advertising. It spent an extra $3.1 million developing the OneRoof, YUDU and DRIVEN classifieds businesses, which will put it in direct competition with the country's dominant online marketplace Trade Me.

While Renaissance upped its stake from 4.9 percent, investors out the door included Allan Gray Australia, which dumped its 12 percent holding. It had been NZME's biggest shareholder at the time of its 2016 demerger from APN News & Media.

Renaissance was set up in 2003 and specialises in investing in small ASX-listed companies. It says it tries to take advantage of sentiment-driven price movements or situations where investors have mispriced a stock because they've made the wrong assumptions or don't recognise when an environment changes.

(BusinessDesk)

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